Many people who approach The Pensions Office wanting to take a tax free lump sum payment from their pension scheme, do not want to take an immediate income from the remainder of their fund. Instead, they choose to defer taking a regular pension until a later age: a facility which is available through a Pension Income Withdrawal contract (often known as ‘Pension Drawdown’).

Other clients want or need to take an immediate income and find that a conventional, guaranteed, annuity is appropriate to their needs and circumstances. They are attracted by the certainty of the payments for the duration of their life and, if required, for the lifetime of a surviving spouse following their death. These people must be prepared to accept the lack of flexibility of conventional annuities.

An increasing number of enquiries to The Pensions Office come from people who want or need a tax free lump sum and thereafter want the flexibility to take, from year to year, as little or as much income as they need for their changing requirements and circumstances. There are a number of ways in which some kind of flexibility of future income can be included in a pension arrangement but the most popular method is within a Pension Income Withdrawal contract. These allow income to be waived altogether in any year (or, indeed, for a number of years) and have an upper limit on income of, in simple terms, 120% of a conventional annuity. The more income taken from the fund the greater the pressure on the fund’s investment performance if some erosion of capital is to be avoided.

Ongoing planning, guidance and investment advice is essential if the maximum possible value is to be gained from this highly flexible pension arrangement at the lowest possible level of controlled risk.

With so many options from which to choose, and so much flexibility, it is essential to get the very best advice at the outset, and beyond. It is essential, therefore, to……